N12bn Bank Fraud: NDIC Moves Against DMBs, Staff


BY COBHAM NSA, ABUJA – Alarmed by poor rendition of returns in the nation’s banking sector, the Nigeria Deposit Insurance Corporation (NDIC) is moving against some Deposit Money Banks (DMBs) to further unearth and prosecute cases of fraud and forgeries involving dismissed staff members of affected banks.

This is even as the Corporation said fraud cases perpetrated by staff and insider abuses totaled a whopping ₦12.01 billion in 2017.

According to the Corporation, besides dismissed staff, other culprits identified in the worrying fraudulent practices are staff whose appointments were also terminated on grounds of falsifying financial records and their collaborators

NDIC’s Head of Communication and Public Affairs, Mr Mohamed Kudu Ibrahim said the current moves by the Corporation are informed by its Off-Site Supervision of DMBs’ report that exposed series of dubious rackets ascribed to internal abuse by staff, noting that the figures regrettably grew from 231 in 2016 to 320 in 2017, representing about 38.53 per cent increase in the year under review.

Section 35 and 36 of the NDIC Act No. 16 of 2006 (as amended) requires all DMBs to submit monthly information/returns on fraud and forgeries to the Corporation.

A statement from the corporation stated that the report relied on a total of 286 responses received from 26 banks during the period. There were 22 NIL monthly responses from the banks as at year ended 31st December 2017.

Mr Ibrahim said the report relied on a total of 286 responses received from 26 banks during the period, adding that the 286 responses cited 26,182 cases of fraud and forgeries, representing about 56.30 per cent higher compared to 16,751 cases reported in 2016.

Sadly, the NDIC Spokesman, who admitted that 22 nil monthly responses were received from the DMBs as at the period ended December 31, 2017, said from the ₦8.68 billion reported in 2016, the figures documented in fraud related cases rose to ₦12.01 billion in 2017, representing about ₦3.33 billion or 38 per cent increase.

Ibrahim however explained that while the actual loss slightly declined by ₦24.42 million or 1.03 per cent from ₦2.39 billion in 2016 to ₦2.37 billion in 2017, internet or online-banking and ATM or card-related fraud-types constituted 24,266 or 92.68 per cent of all reported cases, totaling ₦1.51 billion or 63.66 per cent losses recorded during the period under review.

Equally documented in the report are other miscellaneous crimes, including fraudulent transfers or withdrawals; presentation of forged or stolen-cheques; cash suppression; fraudulent conversion of cheques, diversion of customer deposits, diversion of bank charges; and unauthorized credits among others.

Ibrahim however said losses occasioned by the reported cases dropped to ₦682 million or about 11.43 per cent in 2017 as against the ₦760 million recorded in 2016

The Corporation further stated that 22 Licensed DMBs and four (4) Merchant banks made 286 returns on staff dismissed due to fraud and forgeries during the period, adding that 320 of the 26,182 fraud cases in the 26 licensed banks were blamed on internal collaboration by bank staff.

On job loss in the banking industry, the NDIC said a total of 320 employees were either summarily dismissed or had their appointments terminated in 2017, compared to 231 recorded in 2016, adding that the figure represents 38.53 per cent rise in the total number of fraud cases recorded in the year under review.

Meanwhile, the NDIC said positive developments in the sector are due to extra internal control measures deployed by DMBs in the wake of the practical remedial measures aimed at ensuring good corporate governance principles compliance.

The Corporation however noted that despite the Fidelity Insurance Cover taken by DMBs to address internally-induced frauds, the banks should still work to improve their internal control and security measures, maintaining that NDIC is seriously concerned about rising trend of e-Channels (Online banking and Card-related) fraud and forgeries in the industry.

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